Conventional Mortgage

A conventional loan is an indebtedness or mortgage made between a lending institution and a borrower without a third party participant, such as VA or FHA. Most types of conventional loans are paid off in equal monthly payments spread over 15, 25, or 30 years. The interest rate stays the same for the life of the loan. Therefore the monthly principal and interest payment also remains constant. 

Terms of a conventional loan vary among lenders, but basically a loan can be obtained with as little as 5% down payment. When the down payment is less than 20% it is, in most cases, necessary for the loan to have private mortgage insurance to protect the lender. 

VA Loan

The VA does not lend money; VA guarantees a portion of the loan. Thus the lenders who originate the loans feel comfortable with their risk. Qualified veterans can take out loans up to $240,000 with no down payment. VA-guaranteed loans can be combined with second mortgages and are assumable upon qualifying by any future buyer.

FHA Loan 

FHA does not lend money; FHA insures loans against default. This makes lenders willing to finance home purchases on favorable terms. 

With an FHA loan, the down payment can be as low as 2.25% of the purchase price. Points (prepaid interest) may be charged by the lender. Purchasers can choose different rate and point combinations. FHA charges an up-front Mortgage Insurance Premium (M.I.P.) fee. (There is no “up-front” premium on condos.) FHA charges a monthly M.I.P. of .5%.

Lender Funded Programs

Many lenders today are willing to assist buyers with the closing costs. In exchange for paying a higher interest rate, a lender may forgo its normal charges plus pay other closing costs on behalf of the buyer. These plans vary widely, so study them carefully. The advantage is that less cash is required to close. This is offset by higher monthly payments due to the higher interest rates.

Balloon Mortgages

A balloon mortgage is typically a loan which must be paid off after a certain period. The advantage they offer is an interest rate that is lower than a mortgage that is made for 30 years. Balloons may range in duration from 5-to-7 or 10 years. If the 30-year fixed rate quote was 7%, the 7-year balloon may be as low as 6.5%, providing lower payments for the 7-year period. One point to consider, however, is that the investor typically does not guarantee to extend the loan past the balloon date even though most balloon plans contain provisions for optional refinancing. 

Please Contact Denise for more Information on Mortgages

Denise Sacks
Sunstate Mortgage
Mortgage Broker
215 Celebration Pl. Suite 500
Celebration, FL. 34747
www.sacksrealtygroup.com
denisesacks@sacksrealtygroup.com
Tel: 321-559-1101
Toll-Free: 866-254-6877
Fax: 321-939-2307
Cell: 321-354-4057